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U.S. terror attacks will have only short-term effect on stocks and shekel, says Bank of Israel governor

TASE tends to dog tracks of U.S. markets, says David Klein, but the negative effect will only last a few days

The terrorist attacks on the United States have extracted a heavy high human price, but will not have far-reaching implications for the U.S. economy, predicted Bank of Israel Governor David Klein.

Speaking on Israel radio, Klein said that the American exchange is located right where rescue operations are being conducted, which should have no effect in the long term. "The fact that many businesses are located in the area of the disaster will also be of only short-term effect, because American businesses have the capacity to recover quickly," Klein said.

The weakening of the dollar in world markets was natural, Klein said. Israelis tend to view the dollar as a safe harbor, which is why its exchange rate rose right after the events. But this reaction will also be of short-term duration, Klein said.

Klein does not expect the attacks to substantially affect Israeli stocks listed on foreign exchanges, because they are already sharply down together with Nasdaq. The Tel Aviv Stock Exchange tends to ape the situation of American exchanges, and can therefore be expected to lose ground in the short term, Klein said, but the effect won't persist beyond a few days.

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"I think the TASE acted sensibly when it decided to conduct trade as usual," Klein said, echoing most opinions being heard on the markets. "We need to manage the economic policy in a routine way, insofar as is possible," he concluded.

Market players said earlier that opening the stock and currency exchanges for trade as usual sent a message of calm to the rattled public.